Don Smith, the recently suspended chair of the Colleges of Applied Arts and Technology pension plan’s board of trustees, has been removed from his position following allegations of an improper executive compensation approval, according to a report by the Toronto Star.
He was removed Thursday by the members of the plan’s sponsors’ committee amid a formal review of the investment organization’s governance, including decisions around a $1.6-million vacation payout to chief executive officer Derek Dobson and a workplace relationship between the CEO and an employee at the CAAT.
Earlier in the week, the Ontario Public Service Employees Union said Smith and vice-chair Kareen Stangherlin were suspended due to allegations of acting outside policies and procedures, following the departure of three senior executives at the investment organization. CAAT spokesperson Stephen Hewitt previously told Benefits Canada the governance review is expected to be completed “in the coming weeks.”
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In a statement, the investment organization said its board will “carefully consider any recommendations to ensure governance continues to align with best practices.”
According to the report, Graham Lloyd, chief executive officer at the College Employer Council, was asked by OPSEU president JP Hornick to suspend Stangherlin because she allegedly knew about the vacation payout and the workplace relationship, even though decisions around compensation need approval from the entire board. Hewitt said Dobson has an employment contract that governs his compensation and benefits, the report noted.
As a jointly governed pension plan, the CAAT’s board is composed of five trustees appointed by the OPSEU with the remaining trustees selected by plan sponsors.
Level Chan, a partner at Stewart McKelvey, says vacation payout issues come down to the type of employment contract and employer policies — something that can vary from employer to employer.
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He adds in his experience, most organizations would prefer to have policies in place to ensure that unused vacation is taken compared to being paid out. “The contract would depend — particularly when you’re talking about a CEO and senior executives — [on whether] there would be specific terms governing that vacation.”
The CAAT’s pension plan’s governance review is likely informed by existing guidance from the Canadian Association of Pension Supervisory Authorities, he says. These guidelines address conflicts of interest with a robust governance process in place.
While regulatory review guidelines for pension organizations are very detailed with respect to the financial health of the plan, they may not be as detailed in terms of prudent management and administration from a governance perspective, he says.
“We’ve seen gaps [in] governance reflecting that there can’t be a one-size-fits-all [approach] with respect to governance, but when you have larger plans such as the CAAT, then understandably there’s an expectation of a greater level and sophistication of governance.”
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